Insurance CEOs are more concerned than leaders in any other industry about the combined threats to their growth prospects, according to findings from the 20th annual PwC global CEO Survey.
PwC polled 95 insurance CEOs from 39 countries, who anticipate being hugely impacted by disruptive change and feel more threatened than leaders of sectors including entertainment and media, banking and healthcare.
Nevertheless, 80% of insurance leaders are confident they can grow revenues through embracing new technologies, adapting their workforce and pursuing M&A activity.
Fears around the speed of technological change have increased since last year, with 83% of insurance CEOs citing it as a threat to growth (up from 69%) and over a quarter (28%) saying technology will completely reshape competition in the industry over the next five years.
New entrants to the market continue to be perceived as a threat, with 65% of insurance leaders highlighting concerns about the competition they face.
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Over-regulation continues to be the number one concern for 95% of insurance leaders across the globe. Other threats identified are uncertain economic growth (84%), social instability (75%), geopolitical uncertainty (74%) and the future of the Eurozone (72%).
Over half of insurance leaders globally (60%) believe it is becoming harder for them to compete in an open global marketplace amid moves toward more protectionist national policies.
Industry leaders are also concerned about shifting customer behaviour, as 78% of CEOs say this threatens growth (up from 64% last year).
In order to adapt, insurers need to ensure they have a diverse workforce representing their customer base, but 83% of insurance CEOs see a lack of availability of key skills as a threat to business growth.
Path to growth
Despite soft premium rates, low interest rates and subdued economic growth contributing to ongoing cost pressures, insurance CEOs are generally optimistic about their companies’ growth prospects with 81% of those surveyed confident they can achieve revenue growth over the coming year.
Insurance CEOs believe strengthening their digital and technological capabilities is the most important area to capitalise on new growth opportunities and 61% say they are exploring the benefits of humans and machines working together in order to ensure their workforce is fit for the future.
Following a wave of industry megadeals in late 2015/ early 2016, over a third (35%) of insurance CEOs say they are planning new M&A activity in the next 12 months to drive growth and profitability.
Jim Bichard, UK insurance leader at PwC, said: “The optimism shown by insurance CEOs for continued growth shows how the speed of technological change can be turned into a great opportunity.
“As customers demand more interactive and transparent interactions with their insurers, partnering with startups to learn new ways of working enables the sector to tap into a wealth of different experiences.”
Bichard added: “By engaging with these new entrants to the market and simultaneously rethinking their in-house talent strategies, companies are waking up to the fact that a smart, diverse workforce will be their secret weapon.
“Insurers can reap the benefits of being proactive in disrupting themselves as a way of combating perceived external threats to growth such as regulation.”